Construction Firm Does What It Does Best With IT Infrastructure: Build It On Its Own

Building custom software to automate simple tasks, such as procurement or customer service, may not sound all that innovative. But it's a major advance in the home construction industry, where even multibillion-dollar businesses get by on spreadsheets and other vanguard-lagging IT.

Take Pulte Homes, a $14.7 billion-a-year enterprise that built 47,000 houses last year. Next month the company will finish deploying a series of applications, most of them custom-made, that automate every phase of the home-building cycle.

The company ran on spreadsheets and paper-based processes before deploying its new systems, VP and CIO Jerry Batt says. "We had reached the point where we couldn't tolerate running manually," he says. "We needed to innovate through information [technology]. Otherwise we would just hit the wall and fail to grow."

Once composed almost entirely of local, family-owned businesses, the home construction industry has consolidated to the point where companies like Pulte, Toll Brothers, and D.R. Horton rank among the 500 largest businesses in the United States. Industry revenue is sprouting at a 30% annual clip, Batt says. But when it comes to IT, builders usually cling to a small-company mentality. This year's InformationWeek Research survey of InformationWeek 500 executives found that construction and engineering companies devote only 0.8% of their annual revenue to IT, dead last among 21 industries surveyed.

Not so Pulte. The company is rolling out Web-based apps that cover every step in putting together houses: market planning, land acquisition, sales force automation, e-commerce, financial planning and forecasting, purchasing, construction, and warranty service. There are no comprehensive software packages designed for the construction industry, Batt says. For financial management and sales force automation apps, Pulte bought and heavily modified software from Lawson and Siebel Systems, respectively. But software for construction's particulars--scheduling, materials procurement, warranty service, and home options (used by salespeople working with home buyers)--had to be built from scratch.

Creating that software wasn't easy. Just getting Pulte's operations in 54 cities to agree on functionality was tough. Even developing standard terminology was a chore: A patio in one part of the country is a deck in another and a porch elsewhere. Dozens of in-house programmers developed the software, supplemented occasionally by outside developers with specialized expertise.

Pulte's custom apps are built on the .Net architecture and linked via Web services. (It worked to Pulte's advantage to adopt Web services after standards for the technology already had matured, Batt says.) Tools for enterprise application integration provide links to the packaged software. Most apps are built on a common database. Managers and construction foremen alike can access applications using wireless tablet PCs or PDAs.

System planning began in 2000, development started in 2003, and the company has been rolling out the new systems since then. The last is slated for production in November. Pulte next plans to develop a supply chain management system that consolidates materials acquisition. The company leaves some purchases to subcontractors, letting plumbers buy toilets for houses, for instance. Consolidating those purchases will bring greater volume discounts, Batt says, and will let Pulte install better quality fixtures and appliances at lower costs.